Gold Price Weekly Decline: What the U.S.-Iran Peace Deal Means for Bullion

TLDR

• Gold edged up 0.2% Friday to around $4,220 an ounce but is on track for a second weekly loss
• Reports say a U.S.-Iran deal could reopen the Strait of Hormuz and lift oil sanctions
• Brent crude fell over 4% after Trump said a peace agreement may be close
• The European Central Bank raised rates for the first time in nearly three years, citing war-driven inflation
• UBS pushed back its forecast for Fed rate cuts to 2027, which puts pressure on gold demand

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Gold prices steadied on Friday but were still heading for a weekly decline, as traders watched closely for any updates on a possible peace deal between the U.S. and Iran.

Spot gold rose 0.3% to around $4,224 an ounce in London trading. Despite the small daily gain, the metal is down more than 2% over the past week and heading for its second straight weekly loss.

Gold Aug 26 (GC=F)

Reports from Iran’s semi-official Mehr news agency said the U.S. and Iran are negotiating a deal with 14 provisions. The terms reportedly include reopening the Strait of Hormuz, releasing $24 billion in frozen Iranian assets, and a 60-day window to finalize nuclear talks.

Oil Falls on Peace Deal Hopes

Brent crude dropped more than 4% to $86.47 a barrel. It slipped below $90 a barrel on Thursday after Trump’s comments. Oil had spiked earlier in the year when the war, now in its fourth month, disrupted flows through the Strait of Hormuz.

The war has stoked inflation fears worldwide. Lower oil prices could ease some of that pressure, though Brent remains well above pre-war levels.

The European Central Bank raised interest rates this week for the first time in nearly three years. ECB President Christine Lagarde warned that inflation linked to the conflict is spreading beyond energy costs.

Gold’s Outlook Remains Under Pressure

Markets have become cautious about peace deal signals. Ole Hansen, head of commodity strategy at Saxo Bank, said investors have heard more than 30 similar announcements in recent months.

Gold is roughly 20% below where it traded before the war started in late February. The metal recently broke below its 200-day moving average, a closely watched technical level, which triggered extra selling pressure earlier this week.

Julius Baer cut its 3-to-12-month gold price target from $4,500 to $4,250 an ounce. UBS said it now expects Fed rate cuts to be delayed until 2027, which reduces expected demand for gold ETFs in 2026.

The Chicago Mercantile Exchange announced it will launch 24-hour, seven-day trading for its 1-ounce gold futures contract starting July 26, reflecting growing demand for around-the-clock market access.

Silver fell 0.5% to $66.97 an ounce, while platinum and palladium moved higher.

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